Return on investment for UAE property still strong

The UAE real estate market has witnessed a balancing act in the first half of 2017, according to new research by property portal Bayut.com.

Despite both sale and rental prices in Dubai and Abu Dhabi witness a small dip, the market still represents a rich ground for investors looking for strong returns.

Haider Ali Khan, CEO of Bayut.com says: “Over the past years, the market has gradually matured, and as this progression has taken place, investors need more credible information regarding the housing market, and we are working diligently in doing our part by presenting the information.”

The report reveals that the most popular communities in Dubai for rent in H1 2017 were Dubai Marina, Dubai Silicon Oasis, and Jumeirah Village Circle. In Abu Dhabi, the most sought-after areas for rent were Al Reem Island, Khalifa City, and Mohamed Bin Zayed City.

The most searched areas in both emirates, for buying property in H1 2017 were the traditionally in-demand areas, such as Dubai Marina, Downtown Dubai, and Al Reem Island, but also smaller family-friendly suburban areas like Arabian Ranches and Jumeirah Village Circle.

Rents and sale prices drop in Dubai

Compared to H2 2016, average rents have dropped by 10.4 per cent, and average property sale prices have declined by seven per cent. The decrease from both sides of the real estate market indicates that the average return on investment (ROI) has remained stable (4.7 per cent) while the market itself has become increasingly accessible for buyers.

The report from Bayut.com states that by the end of H1 2017 the average rent prices in Dubai have decreased across all property types. For example, the average rent for a three-bed villa has dropped by 7.6 per cent while the average rent for a one-bed apartment has declined by 6.1 per cent.

The only stable property type in Dubai’s rental market throughout H1 were studio apartments which saw a nearly imperceptible dip of 0.1 per cent.

The average property prices in H1 2017 marked a seven per cent decrease compared to H2 2016. However, as both the rental and sales markets are exhibiting a downward trend, the average ROI in Dubai has remained relatively consistent at 4.7 per cent, compared to 4.9 per cent at the end of 2016.

The most popular areas to buy in Dubai have had a downward price adjustment. While average property prices in Downtown Dubai have decreased by 6.6 per cent, Dubai Silicon Oasis has seen a decline 4.9 per cent.

Abu Dhabi follows suit

The market report for Abu Dhabi H1 2017 has experienced a similar trend to that of Dubai as both rent and property price averages have experienced a decline.

The data from Bayut.com is in line with the overall market predictions and trends that anticipated a price fall in Abu Dhabi in 2017.

Compared to the last half of 2016, average rent prices in the capital have decreased by 6.3 per cent in H1 2017, across all property types. Studio apartment average rents dipped 4.3 per cent, from AED 51,184 at the end of 2016 to AED 48,483 now. Similarly, rents for Abu Dhabi villas adjusted downward. For example, renting a four-bedroom villa became 7.7 per cent cheaper on average.

More specifically, decreases were marked on average rents in Al Muroor (10.7 per cent) and Mohammed Bin Zayed City (16.2 per cent) and other popular areas. However, renters in Khalifa City should note this area is not on trend; average rents in Khalifa City have increased by 3.4 per cent in H1 2017.

Bayut.com states that the average property prices in Abu Dhabi have also decreased with declines limited to lower single digit percentages, however, studio apartments in Abu Dhabi have not been subject to the same fall in prices as its larger counterparts (average studio property prices have increased by 2.2 per cent).

Despite a drop in prices, the average ROI in Abu Dhabi still stays strong (five per cent on average).

Future looks bright

Despite a decline in property prices, the decrease in rental prices has kept the ROI consistently stable. Thus, it is currently more accessible for buyers to invest in both Dubai and Abu Dhabi than ever before.

Bayut.com’s report agrees with the predictions of most industry experts that we should expect a rise in both property prices and rents over the ensuing years due to the continued investment in infrastructure, diversification of the economy, and the Expo 2020 being around the corner.

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